AMENDMENT NO. 1 TO
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 1 TO STOCKHOLDERS' AGREEMENT, dated as of August 6,
1998 (this "Amendment"), amending the Stockholders' Agreement (as defined
herein), by and among the parties to the Stockholders' Agreement and Xxxxx
Xxxxxx, Xxxx Xxxxxx, Xxxxxx Xxxxxx, the Xxxxx Xxxxxx Retained Annuity Trust and
the Xxxxx Xxxxxx Irrevocable Trust Agreement (collectively, the "Kieves
Parties"). Capitalized terms used in this Amendment shall have the meanings
ascribed to them in the Stockholders' Agreement unless otherwise defined herein.
RECITALS
WHEREAS, the Company has, simultaneously with the execution and
delivery of this Agreement, entered into a Stock Purchase Agreement, dated as of
the date hereof (the "Stock Purchase Agreement"), with the Kieves Parties as
stockholders of Anagram International Inc., a Minnesota corporation ("Anagram")
and certain related companies, pursuant to which the Company will acquire from
such stockholders all of the issued and outstanding capital stock of Anagram and
such related companies; and
WHEREAS, in partial consideration for the sale of such capital
stock, the stockholders of Anagram shall receive in the aggregate pursuant to
the Stock Purchase Agreement, One-Hundred-Twenty (120) shares of Common Stock of
the Company and warrants to purchase Ten (10) shares of Common Stock (the
"Warrants"); and
WHEREAS, in connection with the acquisition of Anagram the Company
has entered into an employment agreement with Xxxxx Xxxxxx (the "Xxxxxx
Employment Agreement"), the principal stockholder and current chief executive
officer of Anagram, pursuant to which Xx. Xxxxxx shall receive Options to
purchase 6.648 shares of Common Stock; and
WHEREAS, as a condition to entering into the Stock Purchase
Agreement and the Kieves Employment Agreement, the Kieves Parties have agreed to
become parties to the Stockholders' Agreement, dated as of December 19, 1997, by
and among the Company, GS CAPITAL PARTNERS II, L.P., a Delaware limited
partnership, GS CAPITAL PARTNERS II OFFSHORE, L.P., a Cayman Islands exempt
limited partnership, XXXXXXX, XXXXX & CO. VERWALTUNGS GMBH, a corporation
recorded in the Commercial Register Frankfurt, as nominee for GS Capital
Partners II Germany C.L.P., STONE STREET FUND 1997, L.P., a Delaware limited
partnership, XXXXXX XXXXXX XXXX 0000, L.P., a Delaware limited partnership, and
each of the individuals and the Estate of Xxxx X. Xxxxxxxxxxx listed on Schedule
I thereto (the "Stockholders' Agreement"), and the Kieves Parties have
acknowledged that their shares of Common Stock, the Warrants and the Options
shall become subject to the terms and conditions of the Stockholders' Agreement,
including the restrictions on the transferability of the Common Stock and the
Warrants and Options (including the Common Stock acquired by exercise or
conversion thereof).
-1-
NOW, THEREFORE, in consideration of the premises and of the terms
and conditions contained herein, the parties hereto agree that the Stockholders'
Agreement shall be amended as follows, and as so amended that the parties hereto
shall become parties thereto:
A. The definition of "Fair Market Value" in Article I is hereby
amended to add the following at the end thereof:
"; provided, however, that with respect to shares of Common Stock,
Warrants or Options owned by any of the Kieves Parties, the Kieves Parties
shall have the right (at their election within ten days after being
notified in writing by the Company of the Fair Market Value of such Common
Stock, Warrants or Options) to require the Company to engage at the
Company's expense an independent public accounting or investment banking
firm of national reputation that has not, within two years of such
engagement, rendered any services to the Company or the Kieves Parties,
which firm shall be mutually acceptable to the Company and the Kieves
Parties and which firm shall determine such "Fair Market Value" (without
regard to any marketability discount, liquidity discount or minority
interest or similar discount and which determination shall be binding with
respect to (and only with respect to) the related purchase from the Kieves
Parties) and notify the Company and the Kieves Parties of such
determination within fifteen (15) days of such engagement (it being agreed
that the Kieves Parties shall bear the fees and expenses payable to such
firm if such firm determines "Fair Market Value" to be not more than 105%
of the Fair Market Value set forth in the Company's notice to the Kieves
Parties as provided above)."
B. The definition of "Options" in Article I is hereby amended to
add after the word "otherwise" at the end thereof and before the period the
following: "including the Warrants ("Warrants") issued to the Xxxxx Xxxxxx
Retained Annuity Trust pursuant to the Warrant Agreement dated August 6, 1998
between the Company and such trust"
C. The definition of "Warrants" is hereby added in Article I in the
appropriate alphabetical position, which definition shall read as follows:
"'Warrants' shall have the meaning ascribed to it in the definition of
'Options'."
D. The term "Management Investors" is hereby amended to include
each of the Kieves Parties.
E. Sections 4.1 and 4.2 of Article IV are hereby amended and
restated in their entirety as follows:
4.1 Call Rights. If, prior to the consummation of an IPO, a Management
Investor (other than the Estate or the Estate's Permitted Transferees or any of
the Kieves Parties other than Xxxxx Xxxxxx) dies or the Management Investor's
(other than the Estate or the Estate's Permitted Transferees or any of the
Kieves Parties other than Xxxxx Xxxxxx) employment by the Company terminates for
any reason (including due to a Disability, as defined in such Management
Investor's Employment Agreement or any analogous provision of any employment,
compensation or benefit agreement or arrangement, if any, and if not so defined,
upon the good faith determination of the Board of Directors of the Company of
such Disability), the Company shall
-2-
have the right, at its election, to purchase all (but not less than all) of the
Management Investor's shares of Common Stock (including any shares held by its
Permitted Transferees, and for purposes of this Article IV, each of the Kieves
Parties other than Xxxxx Xxxxxx shall be deemed to be Permitted Transferees of
Xxxxx Xxxxxx) within six (6) months after such termination, or fifteen (15)
months after such termination in the case of death of the Management Investor
(with respect to any shares of Common Stock acquired after such termination or
death upon the exercise of Options held by the Management Investor, such period
to run from the date of exercise) at a price equal to the Fair Market Value of
such Common Stock determined as of, in all cases other than the death of the
Management Investor, the date such termination is effective and, in the case of
the Management Investor's death, as of the date of death. The Company shall pay
the purchase price in cash to the extent that (x) subsidiaries of the Company
are permitted to dividend the funds for such purchase to the Company (a
"Subsidiary Dividend") (under both applicable law and the indebtedness of the
Company and its Affiliates) and (y) the Company is permitted to purchase such
shares for cash (under both applicable law and such indebtedness). The Company
shall fund any amount not permitted to be funded through a Subsidiary Dividend
or to be used to purchase such shares with a Buy-Out Note; provided, however,
that the Company shall not be required to consummate the funding of any such
amount with a Buy-Out Note unless and until the issuance of such Buy-Out Note is
permissible under the terms of the indebtedness of the Company, and the
consummation of any such exercise and funding, and the effectiveness of such
exercise, shall be delayed to the extent and with the effect that there is no
breach under such indebtedness, provided that any such amount not permitted to
be funded with a Buy-Out Note shall increase at seven (7) percent per annum
until funded and upon consummation of an IPO shall be fully funded, including
such increase, and provided further that if such delay of the effectiveness of
such exercise and consummation of such exercise and/or funding would not result
in avoiding any such breach, the time for electing to purchase such shares shall
instead be extended to permit such election from time to time until any
remaining election shall not result in such a breach (and the Company shall make
such elections and/or consummate such exercises and fundings, pro rata, as they
are permitted). In the event that any amount due to any Management Investor
pursuant to an election by the Company to purchase such shares under this
Section 4.1 has not been paid or funded with a Buy-Out Note (or to the extent
the time for making such election has been extended) for five (5) years
following the date of such election (or of the beginning of such extension, if
applicable), such Management Investor shall be entitled to elect to cancel such
election (or end such extension, if applicable) and retain such shares to which
such unpaid or unfunded amount relates (and such unpaid or unfunded amount shall
no longer be due or payable), such cancellation to be effective upon receipt by
the Company of written notice of such election from such Management Investor.
The Board of Directors of the Company may, in its discretion, assign the rights
and obligations of the Company under this Section 4.1 to any other Person, but
no such assignment shall relieve the Company of its obligations hereunder to the
extent not satisfied by such assignee.
4.2 Put Rights. If, prior to the consummation of an IPO, a Management
Investor (other than the Estate or the Estate's Permitted Transferee or any of
the Kieves Parties other than Xxxxx Xxxxxx) dies or the Management Investor's
(other than the Estate or the Estate's Permitted Transferee's or any of the
Kieves Parties other than Xxxxx Xxxxxx) employment by the Company is terminated
by the Company for any reason (including due to a Disability, as defined in such
Management Investor's Employment Agreement or any analogous provision of any
employment,
-3-
compensation or benefit agreement or arrangement, if any, and if not so defined,
upon the good faith determination of the Board of Directors of the Company of
such Disability), the Management Investor or the Management Investor's legal
representative or trustee, as the case may be, shall have the right, within
three (3) months after such termination is effective (or one year after the date
of death in the case of the Management Investor's death), to require the Company
to purchase all (but not less than all) of the Management Investor's Common
Stock (including any shares held by its Permitted Transferees) at a price equal
to (A) in the case of termination by reason of death or Disability, the Fair
Market Value thereof determined as of the date of death (in the case of
termination due to death) or the date such other termination is effective and
(B) in the case of termination by the Company for any other reason, the lower of
(1) Fair Market Value and (2) the product of (x) the number of shares of Common
Stock and (y) the New Cost Per Share (or, in the case of shares held by the
Kieves Parties and their Permitted Transferees, a per share amount equal to 119%
of the $105,000 original value of one share of Common Stock based on the
aggregate value of 120.00 shares of Common Stock under Section 2.4(x) of the
Stock Purchase Agreement, dated as of August 6, 1998, by and among the Company
and the Kieves Parties) (subject to adjustment to reflect any adjustments to the
Common Stock made to reflect any merger, reorganization, consolidation,
recapitalization, spinoff, stock dividend, stock split, extraordinary
distribution with respect to the Common Stock or other change in corporate
structure affecting the Common Stock, as the Company reasonably shall deem fair
and appropriate). To the extent the funds for such purchase are permitted under
the indebtedness of the Company and its Affiliates and applicable law to be
funded through a Subsidiary Dividend and to be used to purchase such shares, the
Company shall pay the purchase price in cash. The Company shall pay any amount
not permitted to be funded through a Subsidiary Dividend or to be used to
purchase such shares with a Buy-Out Note; provided, however, that the Company
shall not be required to consummate the funding of any such amount with a
Buy-Out Note unless and until the issuance of such Buy-Out Note is permissible
under the terms of the indebtedness of the Company and the consummation of any
such purchase and funding, and the effectiveness of such exercise, shall be
delayed to the extent and with the effect that there is no breach under such
indebtedness, provided that any such amount not permitted to be funded with a
Buy-Out Note shall increase at seven (7) percent per annum until funded and upon
consummation of an IPO shall be fully funded, including such increase, and
provided further that if such delay of the effectiveness of such exercise and
consummation of such exercise and/or funding would not result in avoiding any
such breach, the time for exercise of the right to require the purchase of such
shares shall instead be extended to permit such exercise from time to time until
any remaining exercise shall not result in such a breach. In the event that any
amount due to any Management Investor pursuant to the exercise of the right to
require the purchase of such shares under this Section 4.2 has not been paid or
funded with a Buy-Out Note (or to the extent the time for making such election
has been extended) for five (5) years following the date of such exercise (or of
the beginning of such extension, if applicable), such Management Investor shall
be entitled to elect to revoke such exercise (or end such extension, if
applicable) and retain such shares to which such unpaid or unfunded amount
relates (and such unpaid or unfunded amount shall no longer be due and payable),
such election to be effective upon receipt by the Company of written notice of
such election from such Management Investor. The Board of Directors of the
Company may, in its discretion, assign the rights and obligations of the Company
under this Section 4.2 to any other Person, but no such assignment shall relieve
the Company of its obligations hereunder to the extent not satisfied by such
assignee.
-4-
F. Article IV is hereby amended by adding Section 4.3 as follows:
4.3 Warrants. For purposes of Sections 4.1 and 4.2, each outstanding
Warrant shall be treated as a share of Common Stock except that in the case of
any such Warrant, the price at which the Company shall have the right to
purchase such Warrant, in the case of Section 4.1, and the price at which the
Management Investor shall have the right to require the Company to purchase such
Warrant, in the case of Section 4.2, shall be equal to the purchase price
attributable to the share(s) of Common Stock issuable upon exercise of such
Warrant less the exercise price of such Warrant with respect to such share(s).
G. Parties. By executing this Amendment, each of the Kieves Parties
hereby agrees to become a party to the Stockholders' Agreement as a "Management
Investor" as provided herein and as amended hereby and Schedule I shall be
amended and restated as set forth in Schedule I hereto.
H. Effectiveness. The effectiveness of this Amendment is contingent
upon the consummation of the "Closing" under the Stock Purchase Agreement. If
such Closing does not occur, this Amendment shall have no effect and shall be
void ab initio without any party hereto having any liability to any other party
hereto (provided that the foregoing shall not limit the rights of the parties
thereto under the Stock Purchase Agreement).
I. Governing Law. This Amendment shall be governed and construed
and enforced in accordance with the laws of the State of New York, without
regard to the principles of conflicts of law thereof.
J. Descriptive Headings, Etc. The headings in this Amendment are
for convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Amendment
otherwise requires, references to "hereof," "herein," "hereby," "hereunder" and
similar terms shall refer to the entire Stockholders' Agreement, as amended by
this Amendment.
K. Reaffirmation. In all respects not inconsistent with the terms
and provisions of this Amendment, the Stockholders' Agreement shall continue to
be in full force and effect in accordance with the terms and conditions thereof,
and is hereby ratified, adopted, approved and confirmed. From and after the date
hereof, each reference to the Stockholders' Agreement in any other instrument or
document shall be deemed a reference to the Stockholders' Agreement as amended
hereby, unless the context otherwise requires.
L. No Waiver. The execution, delivery and performance of this
Amendment shall not operate as a waiver of any condition, power, remedy or right
exercisable in accordance with the Stockholders' Agreement, and shall not
constitute a waiver of any provision of the Stockholders' Agreement, except as
expressly provided herein.
[SIGNATURE PAGE FOLLOWS]
-5-
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be duly executed on the date first written above.
AMSCAN HOLDINGS, INC.
By:/s/Xxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President
Address: 00 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Secretary
Telecopier No.: (000) 000-0000
GS CAPITAL PARTNERS II, L.P.
By: GS Advisors, L.P.
General Partner
By: GS Advisors Inc., its
General Partner
By:/s/Xxxxxxx X. X'Xxxxx
---------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Vice President
Address: c/o Goldman, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx
Telecopier No.: (212)
357-5505
GS CAPITAL PARTNERS II OFFSHORE, L.P.
By: GS Advisors II (Cayman), L.P.
General Partner
By: GS Advisors II, Inc., its
General Partner
By:/s/Xxxxxxx X. X'Xxxxx
---------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Vice President
Address: c/o Goldman, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx
Telecopier No.: (212)
357-5505
XXXXXXX, XXXXX & CO. VERWALTUNGS GMBH
By:/s/Xxxxxxx X. X'Xxxxx
---------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Managing Director
By:/s/Xxx Xxxxxxxx
---------------------------
Name: Xxx Xxxxxxxx
Title: Registered Agent
Address: c/o Goldman, Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx
Telecopier No.: (212)
357-5505
XXXXX XXXXXX XXXX 0000, X.X.
By: Stone Street Asset Corp.
General Partner
By:/s/Xxx Xxxxxxxx
---------------------------
Name: Xxx Xxxxxxxx
Title: Vice President
Address: c/o Goldman, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx
Telecopier No.: (212)
357-5505
XXXXXX XXXXXX XXXX 0000, X.X.
By: Stone Street Asset Corp.
Managing General Partner
By:/s/Xxx Xxxxxxxx
---------------------------
Name: Xxx Xxxxxxxx
Title: Vice President
Address: c/o Goldman, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx
Telecopier No.: (212)
357-5505
/s/Xxxxx Xxxxxx Dated:8/6/98
-------------------------------------- -------
Xxxxx Xxxxxx
Management Investor
Address:
/s/Xxxx Xxxxxx Dated:8/6/98
-------------------------------------- -------
Xxxx Xxxxxx
Management Investor
Address:
/s/Xxxxxx Xxxxxx Dated:8/6/98
-------------------------------------- -------
Xxxxxx Xxxxxx
Management Investor
Address:
XXXXX XXXXXX IRREVOCABLE TRUST
dated December 31, 1992
By:/s/Xxxxxxxx Xxxxx
---------------------------
Name: Xxxxxxxx Xxxxx
Title: Co-Trustee
By:/s/Xxxxx Xxxxx
---------------------------
Name: Xxxxx Xxxxx
Title: Co-Trustee
By:/s/Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Co-Trustee
XXXXX XXXXXX RETAINED ANNUITY TRUST
dated December 30, 1992
By:/s/Xxxxxxxx Xxxxx
---------------------------
Name: Xxxxxxxx Xxxxx
Title: Co-Trustee
By:/s/Xxxxx Xxxxx
---------------------------
Name: Xxxxx Xxxxx
Title: Co-Trustee
By:/s/Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Co-Trustee
SCHEDULE I
Management Investors
Xxxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxx
Xxxxxxxxx X. Xxxxxxxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxx
Xxxxxx Xxxxxxxxx
Xxxxx XxXxxxxx
Xxxxx Xxxxxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxx
Xxxx Xxxxxxxxx
Xxxxx Xxxxxx
Xxxx Xxxxxxxx
Xxxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxx Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxx Xxxxxx
Xxxxx Xxxxxxx
Xxxxxx Xxxxxx
Xxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxxx
Xxxxx Xxxxx
Xxxxxx Xxxxxxx
Xxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxx
Xxxxx Xxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxx
Xxxxxx Xxxxxxxx
Xxxxx Xxxxxx
Xxxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxx Xxxxxx Irrevocable Trust
Xxxxx Xxxxxx Retained Annuity Trust